Deepening the culture of entrepreneurship

Excerpted from Mr. Kumar Mangalam Birla's convocation address at the Entrepreneurship Development Institute of India Sixth Convocation held on
18 September 2004 in Ahmedabad.

How do we get more of our young people to want to be entrepreneurs?

While there have been many success stories, I believe that the entrepreneurial
attitude still meets too many roadblocks in India. Our societal norms accord primacy to attributes such as a steady and stable individual career path, reduction in the levels of uncertainty and ambiguity, an aversion to failure, and the desire to 'fit' within a certain 'mould'. Hence, only a very small proportion of the educated elite in India opts for entrepreneurship as a way of life. Even in the case of those who do become entrepreneurs, most of the ventures are clustered around businesses that are more predictable and stable. Few entrepreneurs go for the jugular — the breakthrough.

What do we need to do, so that social and cultural attitudes are more entrepreneur-friendly?

First — a good starting point is to reorient our system of education. I believe that a key factor that may be acting as a brake on the entrepreneurial impulse could be the nurture factor — and I am thinking of the system of education, through school and the university.

The system tends to reward rote, mechanistic learning. Critical questioning and back-and-forth dialogue are largely absent, while the creative instincts are stifled. The educational process is biased towards finding 'correct' answers, rather than examining a range of possibilities and experimentation. Such a rigid learning environment hardly makes for excitement. The mind is therefore steered, at a very young age, towards conformity. As a result, the spark of entrepreneurship starts getting doused quite early on in life.

Second, our key institutions must interact more with each other. Today, the boundaries between the university, business and government laboratories are sharply demarcated. There is hardly any flow of ideas or talent — between
the university research lab and applied research in business. Potentially good ideas therefore stagnate for want of an airing. The result is that some of the best entrepreneurial talent finds that it has to leave India, in order to be able to strike it big. This situation may be changing, but not quickly enough. The infrastructure for entrepreneurship — a solid core of university-led research, the venture capitalists, the willingness by business to take and build on the research and take it forward into the commercial arena — all this is still substantially lagging in our country.

Third, entrepreneurship needs to take stronger roots where it is most needed — at the village level, where the greatest income-generating opportunities exist. According to a World Bank study, off-farm employment can play a vital role in catalysing income growth and promoting stability of rural incomes. Rural households value such non-farm incomes highly, not only because they contribute significantly to overall income levels but also because they reduce their exposure to income fluctuations associated with bad harvests. Sadly, in India only about a third of rural households' income comes from non-farm sources, much of it from micro and small-size firms. The scope for non-farm income to increase is enormous.

Fourth, even the largest organisations in India need to experience — and imbibe the refreshing breeze of entrepreneurship. Without that, they run the risk of becoming ossified. It has happened to the largest of companies the world over.

As the Head of Microsoft Research put it, "Most large organisations have a mission, and invention often takes you in another direction." So, large organisations need to create a state of continuous tension and flux, and stay alert. The job of the leader is to keep the status quo, the established way of doing things, under constant challenge.

And that's the reason the entrepreneurial mindset is needed, even in the largest of organisations. But, as you may be aware, large organisations can be extremely hostile ground for entrepreneurs to bloom in. Because, while entrepreneurs make ample use of intuition — the 'gut feel' — this is an attribute formal organisations downplay. In most large companies, risks are tightly controlled, and out-of the-box ideas discounted.

The task cut out for large organisations like ours is to make space for new ideas and encourage a spirit of experimentation — tone down the bias for analysis and certainty, with the bias for experimentation, and for trying things out. If it doesn't work, by all means, scrap it. But do give the champions of an idea the chance to try it out.

For example, some activities and projects and some of the people who are inclined towards entrepreneurship, may just need to be shifted outside the more formal work groupings, to looser work settings that provide greater autonomy, or the corporate reward systems may have to be modified so that occasional failure is not penalised. Creating an entrepreneurial culture may also require that normal recruitment criteria be dispensed with — because, people with innovative ideas and impulses may not necessarily have the 'right' credentials. The trick is doing all this without throwing overboard what works. The discipline and the checks and balances imposed by formal structures are very necessary. But so is the need to retain the spirit of entrepreneurship.